Seattle plans to charge for water rebate

Tax would recoup court-ordered refund

By KATHY MULADY, P-I REPORTER

Published 10:00 pm, Thursday, January 29, 2009

If you have lived in Seattle for more than four years, you might get a rebate on your Seattle water bill this spring. But if a proposed city plan goes through, you will also be paying more on your water bill to cover the cost of that rebate -- and then some.

It's as confusing as it sounds.

If you were a Seattle water customer sometime between March 2002 and December 2004, you are due a refund on your water bill under a court order issued in October.

The rebates are for fire hydrant costs that were incorrectly charged to water customers in Seattle. Fire hydrants are a basic city responsibility and have to be paid for from the general fund, the Washington State Supreme Court said.

It's similar to an earlier court decision in connection with Seattle streetlights five years ago. In that case, the city gave City Light customers rebates ranging from $30 to $60. Money was pulled right from the general fund.

This time the total amount needed is $22.7 million, including the rebates, attorney fees and administrative costs.

City officials, wary of waning revenues and a tough economy, aren't sure they want to remove millions of dollars from the general fund.

So Mayor Greg Nickels has proposed a plan that is now being considered by the City Council to pay the rebates from the general fund, then reimburse the general fund with a tax increase on the utility and a surcharge on customers.

It's good news for former Seattle Public Utilities customers who have moved out of the city and no longer pay for water here. They will get the refund if they apply for it and won't pay the surcharge.

But it's tough luck for current water customers who moved here after Jan. 1, 2005. They won't get a rebate, but they will still pay a surcharge on their water bills.

An average family that is entitled to a refund from the water utility could end up paying $25 more in the surcharge than they receive in the rebate.

The rebate will be on your May or June water bill if you are eligible.

It's still undecided if the surcharge would be levied all at once or spread out over a few months.

The City Council's Finance and Budget Committee considered several scenarios, solutions and equations Thursday to figure out how to cover the $14 million cost of the rebate, plus attorneys fees, interest charges and other costs. They postponed a decision until next week. The full City Council will likely vote on the plan Feb. 9.

Committee Chairwoman Jean Godden said she is opposed to taking the money from the general fund to cover the rebates without reimbursement, especially since the council and mayor just trimmed $19 million in November from the budget because of the worsening economy.

Councilman Bruce Harrell said he isn't sure citizens should have to be the ones opening their wallets, either.

"It doesn't seem right to make the ratepayer pay when it wasn't the ratepayer's fault," Harrell said.

Some of the needed money could come directly from the Seattle Public Utilities' budget, but $5 million would mean the loss of up to 35 jobs, the committee was told.